Correlation Between Precision Drilling and Gap,

Can any of the company-specific risk be diversified away by investing in both Precision Drilling and Gap, at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Precision Drilling and Gap, into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Precision Drilling and The Gap,, you can compare the effects of market volatilities on Precision Drilling and Gap, and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Precision Drilling with a short position of Gap,. Check out your portfolio center. Please also check ongoing floating volatility patterns of Precision Drilling and Gap,.

Diversification Opportunities for Precision Drilling and Gap,

0.81

Correlation Coefficient

Precision Drilling  Gap,

Very poor diversification

The 3 months correlation between Precision and Gap, is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Precision Drilling and The Gap, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gap, and Precision Drilling is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Precision Drilling are associated (or correlated) with Gap,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gap, has no effect on the direction of Precision Drilling i.e., Precision Drilling and Gap, go up and down completely randomly.

Pair Corralation between Precision Drilling and Gap,

Considering the 90-day investment horizon Precision Drilling is expected to under-perform the Gap,. But the stock apears to be less risky and, when comparing its historical volatility, Precision Drilling is 1.59 times less risky than Gap,. The stock trades about -0.14 of its potential returns per unit of risk. The The Gap, is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  2,413  in The Gap, on December 27, 2024 and sell it today you would lose (288.00) from holding The Gap, or give up 11.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Precision Drilling  vs.  The Gap,

Precision Drilling

Risk-Adjusted Performance

Very Weak

Over the last 90 days Precision Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Gap,

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Gap, has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest fragile performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Precision Drilling and Gap,

The main advantage of trading using opposite Precision Drilling and Gap, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Precision Drilling position performs unexpectedly, Gap, can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Gap, will offset losses from the drop in Gap,'s long position.

The idea behind Precision Drilling and The Gap, pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.